The Jordanian media reports that Egypt has informed Jordan that it is doubling the price of natural gas from $3 per million British Thermal Units (mBTU) to $6-7 per mBTU, to "reflect normal prices in international markets."
Such a price hike could lead to a similar demand to Israeli customers. Egypt has committed to delivering natural gas to Israel Electric Corporation (IEC) (TASE: ELEC.B22) and Israel Corporation (TASE: ILCO) for a reported $4.5-5 per mBTU. Egypt's East Mediterranean Gas Company (EMG) has $15 billion worth of contracts with IEC, Israel Corp., private power station Dorad Energy Ltd., and other, smaller, customers.
Jordan buys 2.5 billion cubic meters of gas from Egypt a year, slightly more than EMG supplied to Israel before deliveries were halted on February 5. Al Sharq Gas Company supplies Egyptian gas to Jordan via a pipeline from the gas fields offshore from El Arish in Sinai to Aqaba in Jordan. Al Sharq Gas corresponds to EMG in function, buying gas from the Egyptian National Gas Company and making money on the margin. Hussein Salem, the largest shareholder in EMG, heads Al Sharq.
A Jordanian government source confirmed the report to "AFP", adding that Egypt threatened to resume gas deliveries only after reaching a deal on a new price.
Published by Globes [online], Israel business news - www.globes-online.com - on March 15, 2011
© Copyright of Globes Publisher Itonut (1983) Ltd. 2011